|
Dow catches merger fever
|
 |
April 6, 1998: 5:22 p.m. ET
Blue chip index closes above 9,000 for the first time ever, Nasdaq tanks
|
NEW YORK (CNNfn) - Bolstered by news of the largest merger in corporate history, the marriage between Citicorp and Travelers Group, the Dow industrials rallied Monday, closing above the 9,000 milestone for the first time ever.
But the Nasdaq Composite, heavily laden with technology issues, suffered severe losses following reports that Microsoft's legal troubles may be about to worsen.
The Dow Jones industrial average rose 49.82 points to close at 9,033.23, climbing comfortably above the 9,000 landmark, which proved slippery ground for the blue chip index Friday. The market's breadth was negative, however, with declining issues leading advances 1,714 to 1,288 as 630 million shares were traded on the New York Stock Exchange.
Peter Canelo, stock analyst at Morgan Stanley Dean Witter, said there was no reason for the Dow's climb to stop. Canelo expects to see the blue chip index around 9,250 to 9,500 by mid-year, although he sees a possible market correction in the second half of the year. (172K WAV) or (172K AIFF)
Broader markets finished lower, with the technology-weighted Nasdaq Composite losing 26.26, or 1.42 percent, to 1,829.14 and the S&P 500 index slipping 1.31 to 1,121.39. (Look here for the performance of widely held stocks.)
The bond market closed lower, consolidating after Friday's rally, which was based on an unexpected decline in payroll jobs in March. The price of the benchmark 30-year Treasury bond fell 1/2 of a point, for a yield to 5.82 percent.
The dollar also traded in a narrow range. Currency investors took a pause after last week's strong gains against both the Japanese yen and the German mark.
Record deal spurs market
News that banking titan Citicorp (CCI) and financial services powerhouse Travelers Group (TRV) plan to join forces in the biggest ever corporate merger, a stock swap valued at $70 billion, raised excitement throughout Wall Street and sent other financial stocks surging.
"This story is a little bit surprising in terms of the players, not in terms of the deal," said Barry Hyman, senior equity analyst at Ehrenkrantz King Nussbaum, who expects more large deals in the finance industry. (218K WAV) or (218K AIFF)
Shares of Citicorp soared 38-1/8, or more than 26 percent, to 181, and the stock of Travelers, a Dow component, rocketed up 11-5/16, or more than 18 percent, to 73. The two were the most actively traded stocks on the Big Board. The new company, to be known as Citigroup, would be the largest financial services group in the world and is expected to have assets of about $700 billion, annual revenues of about $50 billion and operating income of about $7.5 billion, serving 100 million customers in 100 countries.
Shares of other companies in the sector felt a powerful boost from the news, with stocks of potential takeover targets leading the bull run. Among them, shares of Merrill Lynch (MER) gained 10-1/2 to 97, Dow component J.P. Morgan (JPM) rose 10-13/16 to 144-3/4, Chase Manhattan (CMB), a rumored suitor of Merrill, climbed 6-3/4 to 146-7/8, and Lehman Brothers (LEH) jumped 6-3/16 to 80-13/16.
In other news, a Wall Street Journal report that US Airways Group [U] is talking to both UAL (UAL), the parent of United Airlines, and AMR (AMR), the parent of American Airlines, about a possible strategic alliance with either one of the nation's two largest airlines, initially sent shares of US Airways flying, but the stock reversed course in late trading and finished down 1/8 at 72-7/8. AMR fell 5/8 to 143, and UAL slipped 1-1/8 to 94-1/2. The Dow transports index fell 38.23 to 3,601.03.
Microsoft weighs on technology issues
Shares in the hot technology sector failed to join the rest of Wall Street in the rally, weighed down by industry leader Microsoft. Shares of Microsoft (MSFT), the most active issue on the Nasdaq, fell 3-1/16 to 89-15/16, following a Wall Street Journal report that the Justice Department has gathered enough evidence to launch a new antitrust case against the software giant.
Other technology losers included Dell (DELL), which fell 2-1/8 to 65-1/4, Compaq (CPQ) off 7/8 to 24-15/16, Oracle (ORCL), down 1 to 27-1/8, and Intel (INTC), down 2-13/16 to 73-7/8.
Intel was hurt additionally by news that National Semiconductor (NSM) has found a way to combine most chips used in a personal computer into a single chip, raising the possibility of much cheaper computers. Shares of National Semiconductor rose 3-7/16 to 23-11/16.
-- by staff writer Malina Poshtova Zang
|
|
|
|
|
 |
|
